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What is the Sharing Economy?

The “sharing economy” has become popular buzzword recently. Companies such as Airbnb and Zipcar have made it easy, mainstream and hip for users to get on board with sharing their homes and cars with other members of their respective sites.

According to Wikipedia, the definition of the sharing economy is as follows: “The sharing economy (sometimes also referred to as the share economy, shared economy, mesh, collaborative economy, and collaborative consumption) is a socio-economic system built around the sharing of human and physical assets.” Proponents of this new sharing environment argue for its efficiency, environmental friendliness, and more egalitarian way of running things.

Some critics, however, have their own viewpoint about this trending system.

A recent article from The Wall Street Journal titled Four Myths on How Consumers React to the Share Economy starts off by stating that it is a myth that consumers engage in the sharing economy because sharing rather than owning is better for the environment and signifies they are trendy, global citizens who care about treading lightly on the Earth. It states that the reality is that consumers value their use of the goods or services and find the cost acceptable, rather than the environmental effects of leaving fewer footprints.

The other myth it highlights is that consumers want to behave in an altruistic way and that the sharing economy allows this. The reality is that people prefer a regulated medium that allows users to build trust before staying over in a stranger’s home or vehicle. This is why companies such as Airbnb and Zipcar have insurance nets to cover any damages, and why they heavily regulate both the property owners and the users.

In reality, the sharing economy is really a more physical manifestation of the openness of the internet. Tim Berners-Lee, the inventor of the World Wide Web, once said that, “The original idea of the web was that it should be a collaborative space where you can communicate through sharing information.” Instead of information, users share that which they have in excess or that which is not being used. The beauty of this concept is that it creates jobs and extra sources of income for participants.

The business model does not stop at cars or apartments, companies such as Boxbee enables users who are moving, traveling, or are just looking for extra space at home to order boxes, which it claims it can deliver to your doorstep within the hour. NYU Professor Arun Sundararajan, who has been called a favorite public intellectual of the sharing economy, views the likes of Uber as an extension of public service.

Do you have a big idea for the sharing economy? Perhaps you’re on your way to building the next Zipcar or Boxbee. We love entrepreneurs who are looking to change the demographic of sharing. If you’re looking to get started with a bit of branding, download our free 10 step guide to boost your branding.

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